Bills Digest no. 40 2009–10
Private Health Insurance Legislation Amendment Bill (No. 2) 2009
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
Private Health Insurance Legislation
Amendment Bill (No. 2) 2009
Date introduced: 17 September 2009
House: House of Representatives.
Portfolio: Health and Ageing
Commencement: On Royal Assent
Links: The relevant links to
the Bill, Explanatory Memorandum and second reading speech can be accessed
via BillsNet, which is at http://www.aph.gov.au/bills/. When Bills
have been passed they can be found at ComLaw, which is at http://www.comlaw.gov.au/.
The Private Health Insurance Legislation Amendment
Bill (No. 2) 2009 (the Bill), proposes to amend the Private Health
Insurance Act 2007 (the Act), to allow for:
- conditional listing of prostheses on the Commonwealth Prostheses List
(the List)
- the Minister for Health and Ageing to make rules to specify criteria
for listing of prostheses on the List.
Prostheses are artificial devices attached to the body as an aid, or
substitute for body parts that are missing or non-functional. Prostheses
can include: cardiac pacemakers and defibrillators, cardiac stents, hip
and knee replacements, intraocular lenses, and human tissues such as human
heart valves, corneas, bones (part and whole) and muscle tissue.[1]
The Act requires private health insurers to pay benefits for prostheses
that are provided as part of an episode of hospital treatment or hospital
substitute treatment and for which a Medicare benefit is payable for the
associated professional service.[2]
Prostheses and human tissue products that attract benefits are specified
in the Commonwealth Prostheses List, contained in the schedule to the
Private Health Insurance (Prostheses) Rules (the Rules), which also specify
the benefit amount. There are more than 9500 products on the Prostheses
List.[3]
The Prostheses List derives from a long-established system for funding
of surgically implanted devices by health insurers. In the past, the term
‘surgically implanted prosthesis’ was used to distinguish the listed products
from devices such as artificial limbs, which, while meeting the ordinary
meaning of prostheses, are not part of these arrangements.[4]
In order for a new prosthesis to be listed, an application requesting
this must be made to the Minister for Health and Ageing. The Minister
may take advice from the Prostheses and Devices Committee (PDC) when deciding
whether or not to grant an application to list.[5]
Applications are assessed against mandatory criteria as specified in the
Act, and non-mandatory criteria. Mandatory criteria include:
- the product must registered on the Australian Register of Therapeutic
Goods
- the product must be provided to a person as part of an episode of
hospital treatment or hospital-substitute treatment and
- a Medicare benefit must be payable in respect of the professional
service associated with the provision of the product (or the provision
of the product is associated with podiatric treatment by an accredited
podiatrist).[6]
Non-mandatory criteria are set out in administrative guidelines which
specify that the product should:
- be surgically implanted in the patient and be purposely designed in
order to either replace an anatomical body part; combat a pathological
process; or modulate a physiological process or
- be essential to and specifically designed as an integral single-use
aid for implanting a product, as described above, which is only suitable
for use with the patient in whom that product is implanted or
- be critical to the continuing function of the surgically implanted
product and which is only suitable for use by the patient in whom that
product is implanted and
- has been compared to alternate products on the Prostheses List or
alternate treatments and:
- assessed as being,
at least, of similar clinical effectiveness and
- the cost of the
product is relative to its clinical effectiveness.[7]
Under current arrangements, it is not clear if additional conditions
can be considered or required when granting an application for listing:
devices are either listed for ‘general use’ or not listed at all.[8] Allowing for such a ‘conditional’
listing may be desirable where a prosthesis is clinically effective in
specific circumstances, but where it may not be considered appropriate
for ‘general use’. For example, while insulin infusion pumps are considered
life-saving for some people with diabetes, the current rules only allow
for an ‘unconditional listing’ of these devices. The Minister points out
this could lead to health insurers being required to pay benefits for
the device, regardless of the clinical circumstances in which it was provided.[9]
The proposed amendments to subsection 72-1(2) would permit
the Rules to set out additional conditions or circumstances that need
to be satisfied in order for a health insurer to provide a benefit for
a listed device. The Rules are legislative instruments subject to Parliamentary
scrutiny. Further, proposed subsection 72-10(6) would allow
for the Rules to specify listing criteria that are in addition to those
mandatory criteria contained in the Act but not so as to over-ride them,
and would also allow for different listing criteria to apply in different
circumstances. This would allow for the listing of new kinds of prostheses
in a yet to be developed section of the Prostheses List.[10]
In her second reading speech, the Minister highlighted the significance
of the proposed amendments for insulin pumps.[11] Although private health insurance companies
reimburse the cost of insulin pumps,[12]
there has always been some uncertainty about their long-term status on
the Prostheses List because they are not surgically implanted, do not
require hospital admission for initialisation and are not associated with
a Medical Benefits Schedule (MBS) item.
However, insulin pumps for people with type 1 diabetes (T1D) are in effect
a prosthetic because they replace the function of pancreatic cells which
produce insulin and which are destroyed by an autoimmune process that
induces T1D. For people with diabetes, particularly T1D, insulin pumps
are an alternative method of insulin delivery which, as a number of studies
have substantiated, offer improved glycaemic control and blood glucose
stability.[13] Optimum glycaemic control is
a clinical goal of diabetes management because of the relationship between
poor glycaemic control and the greater risk of diabetes complications.[14]
Given that insulin pump wearers have to calculate insulin doses based
on carbohydrate consumption and blood glucose levels and program the pump
accordingly, change cannulas and monitor insertion sites, some may question,
particularly in relation to young children, the Minister’s assertion that:
‘Pumps reduce the need for parental supervision in looking after a child
with type 1 diabetes.’[15]
A recent Australian insulin pump review highlights the parental management
implications for children with T1D:
In the case of toddlers, preschoolers and primary-school-aged
children, the initiation of insulin pump therapy requires the child’s
parent(s) or caregivers to be committed to being the “pump user” and
active participants in diabetes management … young children are cognitively
unable to learn nor manipulate the pump functions, and cannot be relied
upon to appropriately calculate and administer … doses independently.[16]
It should also be noted that while, as the Minister notes, improved lifestyle
can be a benefit for insulin pump users, improved glycaemic control is
the paramount goal.
The Government’s Review of the Prostheses Listing Arrangements (2007)
acknowledged the ongoing uncertainty surrounding devices such as insulin
pumps which were listed on the Prostheses List, but do not meet the listing
criteria. While the Review recommended that items not meeting the listing
criteria be removed by December 2008—a recommendation accepted and since
implemented by the Government[17]—it
also suggested separate arrangements to ensure their private health insurance
cover:
There is also the matter of how to deal with high
value devices such as replacement speech processors or insulin pumps
which do not require hospital admission as part of the provision process
and are not associated with an MBS item. Under current arrangements
insurers are not required to pay benefits for products provided in these
circumstances, even though the items are included on the List. As long
as insurers take a sensible approach to paying benefits for these items
I see no need to change current regulatory requirements. However, I
note that if it proves necessary the Minister could establish arrangements
to require insurers to pay benefits through an alternative mechanism,
as it is clear that they do not meet the criteria to be a prosthesis.
[18]
In relation to insulin pumps, the Bill’s provisions complement other
government measures, introduced by the current and previous governments,
which support insulin pump usage. In 2004, National Diabetes Services
Scheme subsidies were introduced for insulin pump consumables.[19]
More recently, the 2008–09 Budget provided means-tested subsidies of
up to $2500 towards the cost of insulin pumps for people under the age
of 18 with T1D, where insulin pump therapy is deemed clinically necessary.[20] However, while this measure was welcomed by some stakeholders,
there is a question about the adequacy of the subsidy. Those receiving
the maximum subsidy of $2500 will need to pay at least that amount again
for the most basic model of insulin pump. The low uptake figures would
appear to substantiate the inadequacy of the subsidy. Departmental advice
provided in response to a Senate Estimates question confirmed that the
uptake has been ‘lower than anticipated’, with total expenditure of around
$419 000 up to June 2009, well below the budget estimate of $1 million.[21]
The scheme is also a limited one because it does not take into account
other people who may have a clinical need for an insulin pump and need
support, including young adults with T1D and women with gestational diabetes.
The Explanatory Memorandum states that the Bill has no financial impact.[22]
Item 1 proposes to amend paragraphs (c) and (d) of table item
4 in existing subsection 72-1(2) of the Act, in relation to the
prosthesis benefit circumstances. Proposed paragraph (c)
provides that a health insurance benefit would be payable if the prosthesis
is provided in circumstances where a Medicare benefit is payable (the
same as the current provision) and if the Rules specify other conditions
that are to be met, that these conditions are satisfied. Proposed
paragraph (d) provides that a health insurance benefit may also
be payable if the prosthesis is provided in circumstances (other than
where a Medicare benefit is payable) set out in the Rules, and where the
Rules set out conditions, those conditions are satisfied.[23]
Item 2 proposes to insert new subsections 72-10(6)
and (7) into the Act, in relation to the listing of a prosthesis
in the Rules. Proposed subsection 72-10(6) enables
the Rules to specify the listing criteria that must be satisfied in order
for an application to list a prosthesis to be granted. This proposed subsection
also enables the Rules to provide for different listing criteria to apply
in different circumstances. Proposed subsection 72-10(7) provides
that the Minister would not be able to grant an application for listing
if any applicable listing criteria is not satisfied. A proposed note
to proposed subsection 72-10(7) clarifies that the Minister
would have discretion to refuse to grant an application, even where the
listing criteria are satisfied.
Concluding
comments
To date, the proposed measures have not generated significant public
commentary from stakeholders,[24] although the surety of private health insurance
coverage will no doubt be welcomed by consumers.
However, while the proposed amendments would allow for the conditional
listing of devices that do not meet the current criteria for the Prostheses
List, the Minister notes that ‘with further developments in medical technology
there is likely to be a greater need for listing devices on a conditional
basis in the future’.[25]
In relation to insulin pumps, there is already another challenge with
new insulin pumps incorporating continuous glucose monitoring devices.
The costs of the transmitter components of these devices are reimbursed
through ancillary health insurance by only some private health insurers;
the sensor components are not covered nor are they eligible for any government
subsidy.[26]
The challenge will be balancing access to these new technologies while
containing costs for all stakeholders, including private health insurers
and consumers.
Amanda Biggs
19 October 2009
Bills Digest Service
Parliamentary Library
© Commonwealth of Australia
This work is copyright. Except to the extent of uses permitted by the
Copyright Act 1968, no person may reproduce or transmit any part of this
work by any process without the prior written consent of the Parliamentary
Librarian. This requirement does not apply to members of the Parliament
of Australia acting in the course of their official duties.
This work has been prepared to support the work of the Australian Parliament
using information available at the time of production. The views expressed
do not reflect an official position of the Parliamentary Library, nor
do they constitute professional legal opinion.
Feedback is welcome and may be provided to: web.library@aph.gov.au.
Any concerns or complaints should be directed to the Parliamentary Librarian.
Parliamentary Library staff are available to discuss the contents of publications
with Senators and Members and their staff. To access this service, clients
may contact the author or the Library’s Central Entry Point for
referral.
|
